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(Bloomberg View) — Stash.

“What happens when two finance vets get together with a guy who helped run a water bottle company and worked for Moby (yes, that Moby) selling teas, and build an app to convince today’s young consumers to start saving and investing?” asks this BuzzFeed article, and one thing that happens is that I get irrationally angry. The app is called Stash, and come on:

The menu of investments are arranged to appeal squarely to how consumer marketing types think of young people. Yet in fact, these categories are mostly relabeled exchange traded funds from BlackRock’s iShares. What Stash tries to add, and what it’s charging users for, is both the unique framing of the funds and ease of use.

“That iShares investment, which is a great investment, is not something that most people we talk to could really get their heads around,” Ronick said. “It wasn’t something they couldn’t talk to their friends about and share on social media, it’s kinda like medicine.”

Stash is basically a translator from Stereotyped Millennial into Finance: You say “I believe in Clean and Green,” and it translates that into an investment in the iShares Global Clean Energy ETF; or you say “I like Internet Titans,” and it translates that into an investment in the First Trust Dow Jones Internet Index Fund. For this Stash charges a fee of $1 per month or 25 basis points a year, depending on how much you have in your account.

This is obviously annoying! Not, like, “Stocks Nearby” annoying, but pretty annoying. But this sort of identity-based, let’s-not-forget-to-mention-social-media consumerist pandering is how everything else is sold, so why shouldn’t it be how financial products are sold? Like it is easy for me to sit here and say to young people, one, you should invest in broad index funds, not funds concentrated in trendy areas like the Internet or clean technology, and, two, you should try to minimize fees instead of paying someone just to rebrand index funds for you. But you should drink tap water instead of Coke, too, and stay home and read Proust instead of blowing a whole month of your salary on Taylor Swift tickets. All consumption is dumb, if you think too hard about it. That’s why it is consumption. At least consumption of financial “advice,” or whatever this is, might trick you into saving money. There is a weird taboo, driven partly by regulation and partly by snobbery, that financial products shouldn’t be marketed like consumer products; perhaps the millennials, and those who love to sell them things, will end that taboo.
Bank earnings.

I guess they’ve been kind of bad? Goldman, in particular, lives by fixed-income trading revenue and seems to be dying, or at least moderately embarrassed, by it:

A 34 percent drop in third-quarter bond-trading revenue left New York-based Goldman Sachs short of analysts’ earnings estimates for the first time in four years and was the second straight quarter results from that business were worse than its biggest competitors. Among the four Wall Street banks that have reported results, Goldman Sachs’s share of fixed-income revenue in the past six months is the lowest since Chief Executive Officer Lloyd Blankfein took over in 2006.

Bloomberg’s Lisa Abramowicz points out that”banks had been complaining for years about torpid bond markets,” but then had even more disappointing trading results when volatility actually picked up last quarter. It is never easy to know what to make of disappointing fixed-income results, though: Despite the Volcker Rule and so forth, bank trading desks are in the business of owning bonds, so a decline in net revenue can mean a decline in client activity or a decline in the price of the bonds you own. Generically, volatility is good for activity, but bad for prices. Here’s a guy:

“It was a hard market to make money in as a market maker,” said Devin Ryan, an analyst with JMP Securities. “Equities businesses tend to benefit from the volatility, whereas in fixed income the headwind was a sharp move in asset prices. You never know how a firm is positioned, but they tend to be net long. That hurts.”

On the other hand, volatility isn’t always good for activity: “When everyone says, ‘Man, I’m taking down risks,’ nobody calls Goldman,” says another analyst. (Occasional disclosure: I used to work at Goldman.) Bonuses, meanwhile, will be, well, just guess.
Unicorns.

Here is a fact aboutstartup incubator Y Combinator, which has made early-stage investments in about 900 tech companies since 2005:

YC is an investor in at least six private companies valued at $1 billion or more that went through its program, including payments company Stripe Inc. and human-resources software maker Zenefits Inc.

Those early investments may eventually pay off, but none of the roughly 900 companies has held an IPO.

Other successes include Reddit, Dropbox and Airbnb, but none of them are public yet. It’s almost like the most prestigious school for startups is teaching the startup kids that they shouldn’t even aspire to be public, that success and wealth and massive valuations and household-name status are possible without ever tapping the public markets. They do require more money than YC currently provides, though, so the incubator “raised a $700 million venture-capital fund in late September aimed at expanding ownership stakes in its most successful companies and helping cash-intensive businesses that might have trouble raising funds elsewhere.” I was surprised to see that, despite Silicon Valley’s Randian reputation, YC has a weirdly egalitarian tilt:

With the creation of the VC fund, the Mountain View, Calif., firm has taken on a fiduciary duty to the investors in its fund to pick the winners and steer clear of less-promising companies. This conflicts with its long-standing tradition of giving startup founders equal weight.

“It may change founders’ willingness to tell us really bad things because they’re treating us as a potential investor,” said Sam Altman, YC’s president, in his first interview about the fund.

Mr. Altman said the new “continuity fund” will put money into each funding round raised by every YC company valued at up to $300 million, and then make discretionary bets on companies worth more than that amount.
Here’s the announcement of the fund. Meanwhile, in the initial public offering market, investors seem to want low leverage but also profitability, which might be a challenge for some unicorns. Dan Primack notes that”Square’s IPO now matters more than ever for other tech unicorns,” as “the market for later-stage private capital is beginning to tighten” along with the IPO market.
Elsewhere in unicorns, there is Theranos, the multibillion- dollar-valued private blood-testing company that was the subject of a withering Wall Street Journal report questioning its technology. Theranos’s response was … vague … and the Journal has a follow-up about regulatory issues at Theranos. “Theranos controversy has little to do with ‘unicorns,'” says Primack, reassuringly. And: “Looking to invest in a unicorn? Here’s how.”
Fantasy.

Apparently betting on the outcome of a sports game is “gambling,” for legal purposes, which is sensible enough, because, you know, of course betting on sports is gambling. But betting on the performance of individual players — that is, “daily fantasy sports” — might not be “gambling,” because it might be a “game of skill,” though it is hard for me at least to see how predicting the performance of players is all that different a skill from predicting the performance of teams. But here we are! Anyway daily fantasy sports has been more or less uneasily legal in the U.S. because it is not gambling, and, let’s be realistic, because the big daily fantasy companies, DraftKings and FanDuel, are partly owned by the NBA, Major League Baseball and some NFL owners. But now the Nevada Gaming Commission has declared it to be gambling because, let’s be realistic, it competes with casino-based sports gambling that is only legal in Nevada:

“It’s self-serving, but that is what the agency is designed to do — ensure an environment where the state’s licensed operators have the best chance of success, and part of that mission is to address forms of alternative gambling that fall outside the umbrella of regulation,” said Chris Grove, who writes the influential blog Legal Sports Report.

The nakedness of the self-interest in gambling regulation is always kind of refreshing, like when casino magnate Sheldon Adelson decided that online gambling was immoral, apparently because he wasn’t making any money from it. But the Nevada declaration is particularly delightful because its purpose seems to be to make daily fantasy sports illegal outside of Nevada, because sports gambling is only legal in Nevada:

“The Nevada Gaming Commission concluded that daily fantasy is gambling and needs to be licensed here,” said David Gzesh, a Nevada lawyer specializing in gambling and sports law. “It should give other states pause because if it’s perceived as sports gambling here, no other state can offer it when it violates federal law.”

Though of course there’s no reason for other states to agree with Nevada. Here is more on the federal rules against Internet gambling, which include a specific exception for fantasy sports. Elsewhere, Steve Wynn is mad about Macau’s restrictions on table games.
Ugh the debt ceiling.

It’s getting to be time time to talk about the debt ceiling again, with Treasury estimating that it will run out of money around November 3 and Congressional Republicans once again considering whether to let the U.S. default on its debts and cause a financial crisis for no particular reason. I continue to endorse high-premium bonds as a shady debt-ceiling workaround, but I’m a bit disheartened that Treasury refuses to sell bills at negative interest rates. Selling bills at negative rates — that is, at a premium — would, first of all, be good practice for selling bonds at a premium. But also it would raise more money! I mean, not much more — like, if you sell $8 billion of four-week bills at a rate of negative a few basis points, then you raise a few hundred thousand extra dollars, which probably doesn’t even pay for the lawyers revising the auction rules — but the extra money doesn’t count as debt, and at times like these Treasury really should be taking all the free money it can get.
Meanwhile, while the debt ceiling is a pointless manufactured recurring crisis, the debt is not actually a problem. The budget deficit is at its lowest level since 2007, and, as I alluded to in the last paragraph, the government can borrow at negative interest rates if it wants to. Mike Konczal, citing some IMF economists, suggests that there’s no real reason to pay it down: “What if we should just service our debt — i.e., pay the minimum — and chill?”
People are worried about bond market liquidity.

Despite the ease of borrowing, Treasury seems to be worried about Treasury market liquidity, or at least Treasury market structure:
“The Treasury market has not been fully reviewed in over 15 years,” says Antonio Weiss, a former investment banking executive who is leading the Treasury Department’s deep dive into the mechanics of the market. “We are in the early stages of conducting such a review in light of the very significant changes that have occurred.”

Those changes being mostly a rise in electronic trading and a (presumably related) rise in volatility, which have not been accompanied by a rise in transparency. “The level of opacity that still exists in the market for the debt issued by the largest economy in the world is stunning,” says a guy.
Meanwhile Gawker is predicting an imminent financial-market crash based on a number of worries, none of which are bond market liquidity. I thought bond market liquidity had hit the big time with that Monday Night Football ad last month, but clearly there is still work to be done to get everyone worried about bond market liquidity.

Things happen.

How Banks Funded the U.S. Oil Boom and (So Far) Escaped the Bust. U.K. Regulator Holds Firm onBank Segregation Plan. Evaluating the Rescue of Fannie Mae and Freddie Mac. Putin Allies Said to Be Behind Scrutinized Deutsche Bank Trades. Founder of Galleon Group Is Sued by Younger Brother. EMC Shareholders Not Keen on Tracking Stock in Dell Deal (earlier). Megadeals. BCG’s 2015 M&A Report. How Bad Will It Get for American Express? Here is aseries of short cartoonsfrom the Charles Koch Institute about criminal justice. “The United States criminal justice system could be improved if wesell poor people convicted of crimes into slavery, according to Republican presidential candidate Mike Huckabee.” FreeMBA.

Mistressdiscouragers. Turning Wonky Economic Graphs into Chamber Music. “A man thought driving avan loaded with ammunitionover a garbage fire in western Missouri would be a good way to extinguish the blaze.” BeingHungover at WorkCosts the U.S. $77 Billion a Year. The Metswon. Can tweets about catspredict earthquakes?

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To contact the author of this story: Matt Levine at mlevine51@bloomberg.net To contact the editor responsible for this story: Zara Kessler at zkessler@bloomberg.net
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